The municipal customer base evaporated yesterday and prices shuddered, sending trend reversal shock waves through the Street.

The session actually opened on an upbeat note, after initial state unemployment insurance claims increased 6,000. The positive tone was short-lived, however, and the mood began to sour on worries about foreign interest rate cuts. The Bundesbank cut its discount rate to 5.75% from 6.25% and its Lombard rate to 6.75% from 7.25%, effective today, causing concern that U.S. investment dollars would head overseas.

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